The State Government is currently considering changes to the “Land Rich” provisions of the Stamp Duties Act. These provisions work to assess stamp duty on transfers of land in which a majority interest (50% or more) of a company or trust change from one party to another and the company owns land in South Australia worth more than $1 million. These changes were first announced by the Government in the State Budget in September 2010.
The existing laws are particularly complicated, in that they can affect groups of associates who acquire a majority interest in a “land rich” company or unit trust.
Currently under the land rich provisions, stamp duty is payable on the unencumbered value of South Australia land owned by a company or trust when a person acquires a 50% or more interest in the company or trust and the company or trust owns land worth more than $1 million and is 60% or more of the value of the total assets of the company or trust. In the case of a primary production entity, this is 80%.
It is proposed that this 60% (and 80%) threshold be removed so that changes in the majority ownership of all companies and trusts which own land worth more than $1 million will now be caught for duty.
There will also be further changes which deal with the assets of the company or trust which are to be taken into account in working out the amount of duty to pay.
Finally, the Government proposes to introduce general “anti-avoidance” provisions into the Tax Administration Act where a person has used a tax avoidance scheme to avoid stamp duty.
Currently the amending Bills are subject to review and comment with various industry groups. Further details of these changes will be the subject of a separate article when they are finalised.
This communication provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Should you wish to discuss any matter raised in this article, or what it means for you, your business or your clients' businesses, please feel free to contact us.